You are on page 1of 53

MINERA ESCONDIDA

ANALYSTS VISIT

April 24th, 2004


Presentation Content

Escondida Overview
Operations
Financial Overview
Business Strategy
Growth Opportunities
Marketing
Current Activities

Slide 2
Worlds Premium Copper Region

BOLIVIA
TOCOPILLA CHUQUICAMATA

Northern Chiles Atacama Desert, CALAM A


160 km South East of Antofagasta

CHILE
MEJILLONES

ANTOFAGASTA

COLOSO ZALDIVAR
Cerro Colorado MONTURAQUI
Quebrada Blanca
Collahuasi
ESCONDIDA
El Abra

ARGENTINA
Radomiro Tomic
Chuquica mata
Michilla Lince Spence TATAL

Mantos Blancos Escondida


Lomas Bayas
EL SALVADOR
El Tesoro Zaldivar
CHAARAL
Manto Verde El Sa lvador POTRERILLOS

La Candelaria INCA DE ORO

Andacollo El Indio
Los Pela mbres

El Soldado Andina

Los Bronces El Teniente

Slide 3
Escondida
Norte
Zaldivar
Aerial View
Leach Padsof MEL

Zaldivar
Pit

Concentrator

Main
Pit

Oxide Hamburgo
Leach Pads Tails

N
Phase IV 5 km
Slide 4
Plant site
Facilities Layout
CMZ
Property
Limit
E. Norte
Waste Dump
Limit
Northern
Waste
Dump Limit E. Norte Pit
Ultimate
Limit

Main Pit
Ultimate
Limit
Hamburgo
Waste Dump
Phase Limit
IV Plant N
site

5 km
Slide 5
Coloso Filter & Port

Coloso Filter & Port Facilities


Slide 6
Escondidas Strategy Builds on its Strengths to Maximize Long
Term Value

World
Worlds
Worlds
Largest
Largest
Strong
Strong Copper
Copper Mine
Mine Strong
Strong Cash
Cash
Credit
Credit Flow
Flow
Ratings
Ratings

Strong Low
Low Cost
Cost
Strong
Sponsors Producer
Producer
Sponsors

Diversified
Diversified Stable
Stable
Sales
Sales Base
Base Country
Country

Ability
Ability to
to Unequalled
Unequalled
Manage
Manage Resource
Resource
Expansions
Expansions High
High Quality
Quality
Concentrate
Concentrate

Slide 7
Worlds Largest Copper Mine
L ead ing C op per M ine Sit es
Lea ding Coppe r P ro ducers C ompa nies

E sc on d id a L a gu n a S e ca C ode lc o

P T Free p o rt E scond ida Lag un a S eca


In d o n es ia

BH P Billiton
C hu q u ica m a t a

KG HM P o lish Ph elps D od ge
Cu

R io Tint o
E l T en ie n te
Grupo M exic o
M o re n ci
F-M cM Co ppe r &
Gold
L o s P e la m b re s
An glo Am erica n
Co lla h ua s i plc

KGH M P olska
Mie dz
Ba t u Hija u

M IM H olding s
Ra d o m iro
To m ic
A nto fag asta plc
B ing h a m
Ca n yo n
S PC C
An d in a

0 500 1.000 1.500 2.000


- 2 00 40 0 6 00 80 0 1.00 0 1 .2 00
C o pp er Pro d uction ( Cu Payable '000 to n nes) Coppe r P roduct ion ( Cu Pa ya ble '00 0 tonne s)

Source: Brook Hunt & Associates, Estimated year 2003,


Escondida FY03 and Escondida Laguna Seca
Budget 2004

Slide 8
Sponsored By Worlds Premier Metals & Mining Houses
Mitsubishi Corporation 60% International Finance
BHP Billiton Limited Rio Tinto Plc Mitsubishi Materials Corp 20% Corporation
100% 100% Nippon Mining & Metals Co Ltd 20% 2.5%

Rio Tinto Japan Escon dida


BHP Escondida Inc Escondida Limited Corporation
57.5% 30% 10%

Owners Council

Minera Escondida Limitada

Slide 9
Unequalled Copper Resource
Ore Head Grade s Against Copper in Concentrate Production
2.100
E scon dida w ith
Ca thod es
1.900
Copper in Concentrate ( Payable in Mlbs)

PT Freep ort
1.700
E sco nd id a
1.500

1.300

1.100

900

Ba tu Hijau L os P elam b re s
700 Co lla hua si
Bingh am Ca nyon Ca nde laria
500 Ok Tedi And in a
High la nd Valley
Los Bronces
Alu m brera Cua jone s
300

100
0,00 0,50 1,00 1,50 2,00
Head G rade (% )

Source: Brook Hunt Data for estimated year 2003.


Escondida FY03.
Slide 10
Total Ore Reserves and Mineral Resources:
Official declaration at June 30, 2003, JORC Competent Person: Dr J M
Gilligan
Ore Reserves Mineral Resources
Ore Tonnes Grade Metal Tonnes Grade Metal
Type (millions) (%Cu) (mlbs) (millions) (%Cu) (mlbs)

Sulphide 1,514 1.21 34,293 2,121 1.12 52,550


LG Float 570 0.60 6,026 1,396 0.59 18,254
Escondida LG Leach 673 0.43 6,442
Mixed 51 1.04 478 111 0.82 2,013
Oxide 191 0.71 2,617 248 0.65 3,567
Sulphide 502 1.44 13,541 649 1.33 19,014
Escondida Norte LG Float 95 0.61 998 642 0.58 8,190
Mixed 43 0.81 761
Oxide 105 0.77 1,478 142 0.79 2,476
Sub-Totals All Sulphide 2,680 1.10 54,859 5,481 0.86 104,449
Mixed 51 1.04 478 154 0.82 2,775
Oxide 296 0.73 4,094 390 0.70 6,043
TOTAL All Types 3,027 59,431 6,025 113,266

Slide 11
Copper Production & Head Grade

Material Milled, Headgrade and Copper Production


1,200 3.50%

Tonnes milled (00 000) Production (Cu Contained) (kt) Headgrade (%)
3.00%
1,000

2.50%
800

2.00%

600

1.50%

400
1.00%

200
0.50%

0 0.00%
FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04
YTD

Slide 12
Concentrate Grade Long Term:
Historic Annual Copper in Concentrate (All Production)
46%

44%

42%
Concentrate Grade (%Tcu)

40%

38%

36%

34%

32%
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Fiscal Years

Slide 13
Escondida Schematic Deposit Evolution Profile:
Increasingly complex & variable geological conditions

variability
1991-1997 1998-2010
Cu - Fe Oxides

cc

cc+cv+cp+py
cp + py
>2010
py >> cp

Slide 14
Ore-Related Concentrate Grade & Quality Drivers
Copper Mineralogy
Chalcocite to chalcopyrite ratios decrease with depth
Pyrite Content
Increasing pyrite content over last several years
Sulfide-Sulfide and Sulfide-Gangue Intergrowths
Dependent on alteration, lithology, and degree of enrichment
Trace Element Geochemistry
Zonation of trace and minor elements within ore deposit
Elements such as Ag, As, and Cd contained within copper sulfides,
with high recovery

Slide 15
Phase IV Expansion Components
An additional mine fleet
(1) 65 yd 3 shovel, (6) 380 st haul trucks, (1) drill
Support equipment and maintenance shop expansion
In-pit ore crusher and conveyor to Phase IV concentrator
Relocation of existing crushers
110,000 tpd Concentrator
38-ft. SAG mill and (3) 25-ft. Ball mills
Conventional flotation using large cells, regrind, column cells
Concentrate handling
Slurry pipeline to existing concentrator, then on to the port
Added concentrate filtering and storage capacity
Modifications to port facility
Laguna Seca Tailings Facility
Tailings disposal for life of mine both mills
Improved water reclaim to both mills

Slide 16
Phase IV: Laguna Seca Concentrator:
Detailed Site Layout

Slide 17
Presentation Content

Escondida Overview
Operations
Financial Overview
Business Strategy
Growth Opportunities
Marketing
Current Activities

Slide 18
Escondida Organisational Structure

President (A)
MEL
Kevin O'Kane

VP VP
External & Corporate Affairs Human Resources
Mauro Valds Mark Stone

VP VP
Mine Finance
Larry Hartley Alfredo Atucha

VP (A) VP
Process Operations Services
Frank Cappelli Jorge Muoz

Manager
Health & Safety
Hans Sandoval

Slide 19
Employment
Antofagasta Coloso Escondida Santiago Total Mel
Expatriates 2 0 11 0 13
Operators 0 70 1.698 0 1.768
Technical & Admin. 21 0 100 0 121
Professional/Mgrs 49 17 475 10 551
Total 72 87 2.284 10 2.453

Permanent Contractors 2.135


Avg workforce age 40 years
Avg length of service 8 years Capital Projects 1.167
Employee turnover 0.38%
Attendance rates 96,6%+
Total Contractors 3.302
Female employees 3.9%
Expatriate employees 0.53%

Note: As at 30 September 2003

Slide 20
Safety Lost Time Frequency Rate (LTIFR)
5.00
4.54
4.50
4.00 3.77
3.43
3.50
2.81
LTIFR per mmh

3.00

2.50
2.00
2.00 1.65
1.50
1.50
1.00
1.00
0.50
0.00
1998 1999 2000 2001 2002 2003 2004 YTDA 2004
YTDB
Fiscal Years

Slide 21
Dimensions Now Final
E-W 2.2km 3.5km
Escondida Mine Pit
N-S
Minera Escondida
3.2km
Ltda.
4.8km
Depth 465m 750m

Slide 22
Escondida Mining Fleet FY-04

Electric Rope Shovels Total 14


- P&H 4100 XPB (73 yd Dipper) 3
- BE 495HR (67 yd Dipper) 1
- BE 495 (55 yd Dipper) 9
- BE 395 (30 yd Dipper) 1

Haul Trucks - Total 92


- Komatsu 830E (240 mt) 28
- CAT 793 B&C (240 mt) 48
- CAT 797 (380 mt) 16

Front End Loaders Total 3


- CAT 994 (23 yd Bucket) 3

Drills Total 15
- BE 49R R2s (8), IR D MM2s (2), DM45 (2), C M780 (1) & P&H 250XPs (2)

Auxiliary Equipment Total 52

Slide 23
Mine Production 000s TPD Ex-Pit
1000
901
900 835 858
814
800
725
678 681
700
'000s Tonnes per Day

600

500

400

300

200

100

0
1998 1999 2000 2001 2002 2003 2004
Fiscal Years Histor y YTD

Slide 24
Los Colorados Concentrator

Slide 25
Laguna Seca Production 000s TPD Milled
100

90

80

70
'000s Tonnes per Day

60

50
95
40

30
51.5
20

10

0
2002 2003 2004
Fiscal Years Histor y YTD

Slide 26
Concentrate Grade Ex-Coloso - % Cu Contained
45.0%

40.0%

35.0%
Concentrate Grade % Cu

30.0%

25.0%

20.0% 41.4% 39.8% 39.9% 39.8%


35.6% 37.3%
34.7%
15.0%

10.0%

5.0%

0.0%
1998 1999 2000 2001 2002 2003 2004
Fiscal Years Histor y YTD

Slide 27
Coloso Port 000ts Concentrate Shipped
2500

2000
'000s Tonnes Shipped

1500

1000 2,073 2,145 2,105 2,056


1,813 1,853
1,682

500

0
1998 1999 2000 2001 2002 2003 2004
Fiscal Years Histor y YTD

Slide 28
Copper Production 000ts Cu Contained in Concentrate
1000

900

800
'000s Tonnes of Cu Contained

700

600

500

400 860 838 845


726 755
300 611 641

200

100

0
1998 1999 2000 2001 2002 2003 2004
Fiscal Years Histor y YTD

Slide 29
Oxide Production 000s Tonnes of Cathodes
160

140

120

100
'000s Tonnes

80
150.7 145.1 150.5
136.7
60 113
40
56.4
20

0
1998 1999 2000 2001 2002 2003 2004
Fiscal Years Histor y YTD

Slide 30
Copper Production 000ts Cu Contained
1200

996
1000
860 894 871 892
151
56
'000s Tonnes of Cu Contained

766 137 754


800 145
151 113
600

400 860 838 845


726 755
611 641
200

0
1998 1999 2000 2001 2002 2003 2004
Fiscal Years Concentr ate Cathodes Total

Slide 31
Presentation Content

Escondida Overview
Operations
Financial Overview
Business Strategy
Growth Opportunities
Marketing
Current Activities

Slide 32
C1 Unit Costs in the 1st Quartile
Estimated 2003 Brook Hunt, Copper Industry C1 Cost Curve

125
C1 Cash Operating Cost (US c/lb)

100

75 Esc ondida

50

25

0
0 5000 10000 15000 20000 25000
Cumulative Production (Payable in Mlbs)

Brook Hunt Estimated 2003,


Escondida FY03

Slide 33
C2 Unit Costs
Estimated 2003 Brook Hunt, Copper Industry C2 Cost Curve

150
C2 Production Cost (US c/lb)

125

100
Es condida

75

50

25

0
0 5000 10000 15000 20000 25000
Cumulative Production (Payable in Mlbs)

Brook Hunt Estimated 2003, Escondida FY03

Slide 34
Only 3 Producers with a Lower C3 Unit Cost
Estimated 2003 Brook Hunt, Copper Industry C3 Cost Curve

175

150
C3 Production Cost (US c/lb)

125

100
Escondida

75

50

25

0
0 5000 10000 15000 20000 25000
Cumulative Production (Payable in Mlbs)

Brook Hunt Estimated 2003, Escondida FY03

Slide 35
STRATEGIC KEY ELEMENT NPV
Optimize Escondidas Net Present Value
We will optimize NPV by:
Taking a leadership role within the industry and adopting a flexible
production profile
Continually focusing on cost reduction
Leveraging Six Sigma and the Maintenance Improvent Programs
Using tollgating to improve our Capital Productivity
Capturing the synergies of both concentrators
Leveraging leach technologies
Taking a leadership position in the responsible management of the
use of fossil water; 10% reduction in water requirements

Slide 36
STRATEGIC KEY ELEMENT PEOPLE

Achieve Maximum Potential with Employees


We willl ensure Maximum Alignment Among Employees,
Organizational Structure & Performance Management Systems by:
Attracting and retaining high quality employees
Creating a high performance environment
Focusing on the development of technical and people leaders
Ensuring that learning and skills development are applied to everyone in
the organization
Creating a work environment where we have positive, mature, and direct
working relationships

Slide 37
STRATEGIC KEY ELEMENT CUSTOMERS

To Be The Preferred Supplier of Copper in Concentrate & Cathodes


We will achieve our value proposition to customers through:
Achieving appropriate geographical and market diversification
Utilizing the BHP Billiton Base Metals Marketing structure
Reducing the impact of variable concentrate grades
Emphazising continuous and proactive interaction between the
Operational and Marketing areas
Maintain status as a quality supplier through producing improved and
predictable levels of Grade A quality cathode

Slide 38
Presentation Content

Escondida Overview
Operations
Financial Overview
Business Strategy
Growth Opportunities
Marketing
Current Activities

Slide 39
Sulphide Leach Project Summary
60-100 Mtpa @ 0.6% TCu
1.6 billion t sulphide ore at 0.6%tcu
raffinate Current stockpile 100mt
Copper recovery by:
Air
ROM leaching
Solvent extraction
Solvent Extraction
Electrowinning
180-245 ktpa cathode

Electrowinning
Expected recovery 36%
Crush & Leach + Sulphide/ROM Leach Operations
EW Copper Production
Approx 50% of Cu is chalcopyrite
Initial copper production 180 ktpa
350

300

250
EW Capacit y with ROM Le ach
Increasing to 245 ktpa as ore supply
increases and oxide T/H capacity
Sulph id e/ROM Leach
EW Copper Production - kt

Crus h Leach

becomes available
200 Crush Leach E W Cap acity

150

100
Initial capital $ 870M (incl. water supply)
50
Operating costs < $0.35/lb Cu
-
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030

Fiscal Perio d

Slide 40
Bioleaching Technology
Sulphide leaching requires ferric iron as oxidant
Conversion of ferrous iron to ferric is catalyzed by bacteria
Without bacteria, leaching is slow due to lack of ferric iron
Main bacteria are mesophiles such as thiobacillus ferrooxidans
Mesophiles occur naturally in ore and thrive in acidic conditions at
temperatures from 20-40C
Bacteria require oxygen as does the oxidation reactions
Forced aeration is key for high bacterial activity and fast leaching
The process is simple and robust

Slide 41
Presentation Content

Escondida Overview
Operations
Financial Overview
Business Strategy
Growth Opportunities
Marketing
Current Activities

Slide 42
Diverse Customer Base
COPPER CONCENTRATE SALES BY DESTINATION - 2003

Merchants China
Germ any
7.3% 6.1% India
8.0% Brazil
4.1% 3.3%
South Korea
Sw eden
8.9% Philippines
3.4%
3.0%

Spain
2.8%
Other
14.3% Bulgaria
2.7%
Chile
South Africa
22.1%
1.6%
Iran
0.4%
Japan
Finland
25.8%
0.4%

Slide 43
Diverse Customer Base
CATHODE SALES BY DESTINATION - 2003

Spain UK
3.0% 2.0% Turkey
Canada
0.8%
3.6%
Chile
Intermediaries / BMAG
4.2%
21.9%
Italy
5.9%

Brazil
6.7%
Germany
12.5%
Japan
8.2%

Taiwan France
8.5% South Korea 11.8%
10.8%

Slide 44
Presentation Content

Escondida Overview
Operations
Financial Overview
Business Strategy
Growth Opportunities
Marketing
Current Activities

Slide 45
Water Issue

What caused the water problem between Novembre 2003 and


January 2004:
Deteriorated water-pulp separation from tailings
Inability to increase fresh water supply to Laguna Seca
Concentrator to compensate reduced reclaim water return
Hydraulic restrictions in the tailings transport system did not allow
all tailings to report to the impoundment

Slide 46
Water Issue - How MEL is solving the water problem

1. Secured fresh water to the Laguna Seca Concentrator through an additional


water line
2. Implemented an aggressive maintenance program to restore wells in various
well fields
3. Identified mineral ore types that cause water-pulp separation problems,
allowing the mine to better blend plant feed
4. Identified a flocculant that allows the production of higher underflow density
at lower yield stress and viscosity
5. Will construct a protective wall around the pump barges in the tailings
impoundment
6. Will embark on an engineering program to eliminate hydraulic problems in
the tailings transport system
7. Drilled new wells, allowing MEL to pump up to legal and environmental limits
8. Established a water strategy that will secure future water supply to the
operation

Slide 47
Action Plans HSEC

Simplification and streamlining proposal of the HSEC systems under


the BHP Billiton Standards
Employ the Landmark process to engage the workforce and ensure
their commitment to a zero harm workplace
Implemention of Cardinal Rules Program
Development of Drug/Alcohol Policy
Alignment of HSEC & RDO
Encourage employee participation in Company sponsored
assistance projects for the community to instill a sense of social
responsibility in Escondidas employees,
Adoption of DuPont Job Observation methodology

Slide 48
Action Plans NPV

Los Colorados Mill improvement program


Mine to mill improvement project
Light dump bodies project
Develop long term water sourcing plan
Inventory reduction program
Flexible production plans
Develop a program for coordinating plants, crushers, shovels,
pipelines, filters shutdowns
Development of an integrated production system

Slide 49
Action Plans PEOPLE

Implementation of an employee climate survey


Continuous development of a team based work structure
To build an integrated Performance Management system which
links competency development, individual performance on the job
and remuneration
To perform the second teams check-up (HISI)

Slide 50
Action Plans CUSTOMERS
Eliminate backlog of concentrate deliveries arising from Apollo cuts
Complete Sales Book restructuring
Reduced sales to Merchants
Increase sales to emerging smelter markets, eg., India and
China
Initiate spot sales
Continue to push transition to global market terms for concentrates
Close cooperation with Escondida Operations to address concentrate
grade reduction and variability issues

Slide 51
Head Grade - % Contained Copper
3.0%

2.5%

2.0%
Head Grade % Cu

1.5%
2.75%
2.22%
1.0% 1.95% 1.89%
1.69% 1.54%
1.37%
0.5%

0.0%
1998 1999 2000 2001 2002 2003 2004
Fiscal Years History YT D

Slide 52
Oxide Flowsheet

CRUSHING &
PRIMARY STOCKPILE SCREENING
ORE
CRUSHER

RAFFINATE
CONVEYING SYSTEM
PLS
EXTRACTION LEACH PAD
AGLOMERATION
ORGNIC ORGNIC
RECOVERY

WASHING
SOLVENT
EXTRACTION
WATER

COPPER CATHODES
SULFRIC ACID STRIPPING
150.000 TPA

RICH ELECTROLYTE
LEAN ELECTROLYTE
ELECTRO-WINNING

Slide 53